Understand how a business accelerator can support your company's growth

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Starting a business involves numerous challenges, mainly due to the high competition and the constant changes in the consumer profile . Given this situation, turning to a business accelerator may be the best option. But, ultimately, what is it all about?

Basically, an accelerator is an organization whose main purpose is to ios database support the development of new companies by providing knowledge, tools and resources .

If you have entered our post with the intention of knowing in detail the importance of a business accelerator for startups , congratulations, you have come to the right place!

In our content, you will find valuable information on the following points:

What is a business accelerator?
How does a business accelerator work?
What are your main objectives?
How does it support business development?
Accelerator vs Incubator: Discover the differences
3 business accelerators in Latin America
Keep reading!

What is a business accelerator?
According to the annual research carried out by the Global Entrepreneurship Network platform and the Startup Genome project , “ The Global Startup Ecosystem Report 2021 ” , there are 3 million startups around the globe.

The report also notes that Bogotá (Bolivia), Buenos Aires (Argentina), Mexico City (Mexico), Sao Paulo (Brazil) and Santiago/Valparaíso (Chile) are among the 140 leading ecosystems in the world, thus placing Latin America in a prominent position in the startup scene.

Despite the strong development of new companies in Latin America, staying in the market requires a lot of effort, especially given the unstable economic outlook in the region. Hence the importance of accelerators!

A business accelerator is a company dedicated to promoting the development of startups and other companies that are beginning their corporate career by carrying out activities that provide knowledge and advice. In parallel, these companies invest seed capital, enabling new ventures to scale and reach better positions in their field in a faster and more promising way.

Thus, we can say that the operation of an accelerator is based on the structuring of a program that allows mitigating the risks inherent to the early stages and encourages the growth of businesses with little capital, but with great profitable potential.

In practical terms, a business accelerator sets up a “university” for entrepreneurs and corporate leaders, providing specific knowledge in areas such as operations, finance, talent management, technology and innovation.

In addition to promoting educational programs, these accelerators provide financial resources to help their “students” achieve their goals so that they can raise capital from other investors in the future.


How does a business accelerator work?
To be supported by an accelerator, startups must undergo a robust selection process conducted by a team of specialists. In addition to identifying the most promising new businesses, these experts coach entrepreneurs and foster company growth by providing them with cognitive and financial resources .

Likewise, the staff of an accelerator needs to raise capital from third parties such as multilateral organizations, investment funds and governments, as well as connect with the entrepreneurial ecosystem, angel investors and mentors who can promote the development of the companies participating in the program.

Below, you will find the most notable features of how a business accelerator works :

They base their activities on generations or batches , groups of startups that participate in a program for a certain period of time.
The program extends over a certain time horizon, between 3 and 6 months .
To conclude the accelerator program, entrepreneurs must present their business to potential investors during a public pitch , an event called DemoDay .
Despite their focus on the technological area, more and more accelerators are expanding their horizons towards other sectors.
ROI through stock purchases.
What are your main objectives?
Just like Venture Capital (VC) funds, business accelerators have the main objective of achieving excellent returns on their investments. To achieve this, they invest in the initial stages precisely to mitigate risks through connections, mentoring and effective management practices .

It is a fact that every startup or company has its own expectations and demands. However, when entering the market, these organizations share a landscape characterized by:

economic instability;
digital transformation;
need for growth in a highly competitive environment;
demand for capital.
Accelerators take into account this context, the specifics of the business and the performance of companies during their program —success and failure cases— to structure more effective actions and thus, advise startups appropriately.

Specifically, we can say that the most notable challenges of an accelerator are:

mitigate costs;
optimize productivity;
increase management;
provide market positioning and performance strategies .
By meeting these objectives, the accelerator receives excellent financial compensation by charging a percentage of participation in the companies it promotes.

How does it support business development?
Having the support of an accelerator is a great opportunity for businesses that are in the early stages of development, mainly due to the resources it offers to companies:

Coworking spaces
This is undoubtedly a key resource for international acceleration programs that require companies to operate in their countries. Accelerators usually have specific spaces for training, meetings, working with teams, and job interviews.

Seed capital
On average, business accelerators invest between $20,000 and $150,000 in the companies that participate in their programs. Typically, investment capital can require between 6% and 10% of participation in a startup .

Accelerator capital often involves a combination of funds, services or SAFEs.

Sense of community
As accelerators foster a sense of community, they open up space for companies to exchange knowledge and ideas with more experienced founders . This leads to a significant increase in the network of contacts and events and, consequently, to the optimization of the most attractive and profitable business opportunities.

Contact with investors
In addition to expanding the corporate network of contacts, the accelerator promotes the creation of a bridge between the company and potential investors . Basically, this happens because it has contact with angel investors and VC funds, thus increasing the probability of a startup raising funds after completing the program.

Mentoring
The accelerator's team of experts is ready to help entrepreneurs optimize operations, generate more income, foster growth and, above all, advise on the different corporate areas .

Beyond providing the resources mentioned above, a business accelerator can also provide discounts on products from its partners such as management software and business applications, which enables companies that are just starting out to access top-quality technologies at lower prices.


Accelerator vs Incubator: Discover the differences
Business accelerators and incubators are often considered by many managers to be analogous concepts, especially since both focus on entrepreneurship and innovation. However, it is important to clarify that they are different programs with very specific characteristics.

By now, you should have understood that an accelerator is a company dedicated to boosting growing businesses, either through courses, training and mentoring or financially, thereby reducing their failure rate.

The main objective of an incubator is to optimize the structuring of initial projects by preparing and educating the new entrepreneur for the challenges of the market by providing:

office spaces;
business plan;
legal and administrative support;
development of prototypes and products.
While an acceleration program is rigorous and runs over a time period of 3-6 months, an incubator's plan is flexible and can take up to 2 years.

In terms of funding, the programmes draw on different sources of capital:

Incubator: Universities, entities and companies for economic development.
Accelerator: Private resources, VC.
As you can see, the models provide extraordinary solutions for startups according to their different stages of development, thus allowing companies to advance according to their pace and growth potential.

3 business accelerators in Latin America
Below, take a look at 3 Latin American accelerators recognized for their know-how and excellence:

1. 500 Startups Mexico
Recognized as one of the best accelerators globally, 500 Startups Mexico has a wide network of mentors and experts in product, technology and team . Its average investment ticket is US$ 60 thousand.

2. Rockstart Colombia
Backed by a VC fund and focused on disruptive technologies, Rockstart Colombia invests up to US$65,000 per company.

In addition to providing financial resources to support operations, the program has a US$25 million fund to invest in the most promising and potentially profitable startups .

3. Startup Chile
Considered the most relevant program in the region and with a non-returnable investment power of US$ 80 thousand , Startup Chile promotes between 200 and 250 companies annually.

This is as far as we go!